General Sales Tax

Q: WHEN DO I NEED TO REGISTER TO COLLECT SALES TAX?

A: A seller is required to collect sales tax when they have a link or connection to a state, called nexus, and what they sell is taxable. This link or connection can be caused by many activities and may either be physical or economic. Some common physical activities that can create nexus are having inventory in a warehouse, utilizing independent or subcontractors in a state, having employees in a state, having employees or third parties travel into a state on your behalf, having an affiliate program in the state, and advertising in local media. These are just a few activities that can create a physical nexus.  An economic nexus can be created when you cross a certain amount of sales. The most common economic nexus thresholds are $100,000 or 200 transactions, although there are many deviations. Some states have notice and reporting requirement thresholds, which are much lower. You may find charts with thresholds and effective dates for both economic nexus and notice and reporting requirements in our resource section under charts and matrices.

Q: WHAT IS NEXUS?

A: Nexus is the industry term used to mean link or connection. It is the link or connection that must be present before a state can require you to collect its taxes, like a sales tax, or pay its taxes, like an income tax.

Q: ARE THERE STATES WITH NO SALES TAX? 

A: Yes, 4 states do not have a state-level sales tax. They are New Hampshire, Oregon, Montana, and Delaware.

Q: DO I NEED A REGISTERED AGENT WHEN REGISTERING FOR SALES TAX? 

A: In general, a registered agent is not required if you are just registering for sales tax even though many states make it look like it’s required. There is a workaround or process in most states where you can register without a registered agent as long as you do not have a brick-and-mortar location in the state. If you do need this service, we do provide registered agent representation and other services.